30 April 2025
3 min
Local investment isn’t a new concept for LGPS funds, it’s been part of the conversation for years, with some believing that a fund’s duty to its local area is to invest. While some LGPS funds do invest locally, the allocations are typically on the smaller side (due to the complex nature of these investments) and are done through professionally managed investment funds, rather than directly.
The government’s recent consultation defined ‘local’ to mean a fund’s region (though “region” is not defined) or their pool area, but this definition could evolve. The key drivers of each fund’s definition of local will come from your beliefs about how strongly you wish your fund to aim for a positive impact on your local area, and the opportunity set within your fund’s area.
There is a balance to be struck here. Narrower definitions of local may mean capital is not allocated, whereas broader definitions will see capital allocated away from the fund’s immediate locality, meaning that accepting some level of trade-off will be vital.
Local growth plans are likely to differ depending on the region’s needs. However, the ambitions will create a potential imperative to act in different ways, which will help identify where capital may be needed. Growth goals, and the type of investment they may support, could include:
While this isn’t an exhaustive list of local goals and their required investments, it’s certainly a starting point as the government’s proposals indicate a push for all funds to consider local investment. Moreover, there's a need to invest in a manner very different to the past – working with local bodies to find direct investment opportunities. Therefore, funds must understand this important area before determining the types of investments and impacts they would like to make.
To be most effective, local investment strategies should be informed by where capital is required to support growth ambitions. In decision-making, funds will need to spend time understanding what is needed and consulting with different stakeholders to ensure they are targeting their investment appropriately.
If you have any questions or would like to discuss anything further, please get in touch.
We pride ourselves on being thought leaders and are constantly discussing the many issues facing and shaping our industry. Sign up to find our current thinking on topical issues.
Opens in new window Subscribe
